TISHMAN SPEYER | MEGA MERCER RFP RESPONSE

MERCER MEGA BLOCKS

TISHMAN SPEYER RFP RESPONSE

OCTOBER 2018

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TABLE OF CONTENTS

1. Cover Letter ...... 3 2. Project Executive Summary ...... 4 3. Tishman Speyer ...... 6 4. Financial Qualifications ...... 18 5. Project Concept and Public Benefits ...... 19 6. Project Design ...... 33 6.B.Project Design Alternate – Skypark Concept ...... 34 7. Financial Offer ...... 36 8. Project Financing Plan ...... 42 9. Endorsements for Tishman Speyer’s Bid ...... 48

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1. COVER LETTER

October 5, 2018

CONFIDENTIAL Lori Hill Managing Director, JLL 601 Union Street, Suite 2800 Seattle, WA 98101

RE: RFP Response – Mercer Mega Blocks

On behalf of Tishman Speyer, we are pleased to submit the enclosed RFP response for your consideration. We are very excited about this opportunity, and it has been a true pleasure to work on our RFP response for a site of this caliber. The Mercer Mega Blocks represent a fantastic large-scale opportunity to create a sustainable, inclusive and highly-designed destination at the gateway to South Lake Union. The site plays to many of Tishman Speyer’s strengths – large scale with numerous complexities; public visibility which demands our commitment to world class architecture, marrying world-class design with local tastes; a track record of delivering high-quality affordable housing; an unwavering commitment to sustainable construction and ongoing management; alongside a superior location which meets our requirements for world-class sites which we can invest in over the long term. Our intent is to use this unique opportunity to create a flagship development that not only stands as an example of innovative and creative green and transit-friendly design, but also aligns fully with Seattle's values and commitment to building strong and diverse communities. Through our proposal we are committed to working in partnership with a range of respected local non-profit organizations to ensure the resulting site offers benefits to all Seattleites, regardless of their race, gender, sexual orientation or income level. We have already begun exploring collaborations with organizations like the Urban League of Metropolitan Seattle, Ventures, Bellwether Housing, the Cascade Bicycle Club, the Seattle Building Trades, and SEIU – all of whom endorse this proposal – and continue to actively explore other similar partnership opportunities with additional local non-profit leaders and community stakeholders. We look forward to working with you and the community on this site, and to further discussing the contents of this document with you. For more information on Tishman Speyer, please refer to the enclosed overview of the firm and our history within this RFP response, as well as further information on www.TishmanSpeyer.com.

If you have any questions or comments on our proposal, please do not hesitate to contact Leo Shapland at (206) 442-4310 or Carl Shannon at (415) 344-6630.

Sincerely,

Carl D. Shannon Leo Shapland Senior Managing Director Senior Director, Lead Respondent [email protected] [email protected] | fax: (206) 622 2769

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2. PROJECT EXECUTIVE SUMMARY

Our vision for the Mega Mercer Blocks is to facilitate a new hub for the neighborhood that embodies the best of Seattle: innovation and inclusivity. We will bring our experience designing iconic spaces and social infrastructure for the world’s leading innovators, alongside an ambitious retail, affordability and cultural program that will house authentically Seattle artisans, communities and artists. Among other things, this will facilitate a cross-pollination of ideas between tech and art, and provide housing for the communities that help make Seattle such a great and vibrant place to live, but whom we are in jeopardy of losing. The Mercer Mega Block site is a world-class development opportunity that fits in ideally with Tishman Speyer’s core strengths – namely in that it is a high-profile, large scale, ground-up development opportunity which affords the possibility of innovative design attracting top tier tenants, the scale to enable truly sustainable construction and operation practices that make a difference, and the ability to create a place that can be a destination for occupiers, visitors to the building, and the general public. The site is also complicated – and, given the nature of the proposed sale of the site, highly-visible from a public perspective – and therefore requires a team with a deep track record of financing and developing high-quality, complex projects that have been the hallmark of Tishman Speyer’s expertise since the company’s inception. We have spent a great deal of time working on this RFP response, potential design options, proposed concepts, financial structure, highest and best uses, and the community benefits package that underpins it. We recognize that a site of this caliber requires a truly thoughtful approach from multiple disciplines across our firm – while this was prepared and submitted by our local team, this has received the highest visibility and attention from senior management of the company to bring our global skillset to the project. Our track record of acquiring, developing and managing projects like this in cities across the globe is almost unparalleled, alongside a long and growing track record of developing affordable housing, which we hope is apparent through our response and the projects we reference. We propose two main project concepts for the site – the first represents a mixed commercial approach with retail, lab space, and offices, targeting what we believe to be the highest sale value for the City. The second proposes the same retail/lab/office approach on the Mercer site, but proposes a high-quality, permanently affordable housing building on 615 Dexter, aimed at an average AMI of 60%, covering the AMI range from very low through to workforce housing – to house the people that are consistently priced out of the city they serve and protect. Within this RFP, we have offered a range of transaction prices for the property that gives the City the flexibility to choose between an all-commercial development plan or a commercial and affordable housing development plan, and to elect either a ‘fee simple’ or ground lease approach for each scenario. Further detail on our proposal is contained in Section 7 below, however the following table provides a high-level summary of our proposed offer:

Mixed Commercial (Office + Lab) Commercial + 175 Units Affordable Fee Simple $160M $104M Ground Lease $70M + $4M annual ground rent $40M + $2.75M annual ground rent

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We believe an inclusive and dynamic project will be a better project, and part of what improves the long term health and sustainability of the market for our and others’ benefit as long-term stakeholders in Seattle. Beyond the real estate and economic proposal to the City, we recognize and fully support the City’s commitment to a public benefits on the site. Within this proposal, we have proposed a range of community and public benefits, including: - Sustainability: we commit to a minimum LEED Gold standard, as well as to LEED-certified operating practices once construction completes. We also commit to Salmon Safe practices, as well as bringing our market-leading approaches and experience from other global projects to develop innovative water and energy management programs; - A planted and green roof area on the site larger than Westlake Park – for energy conservation, water runoff, and encouraging biodiversity; - Affordable housing – depending on the City’s preferred development plan, we could offer 175 high-quality, family-oriented, permanently affordable units on the 615 Dexter site. Should this be the preferred option we would commit to building the affordable housing of comparable quality to market rate projects in the vicinity; - Union Labor – an upfront commitment to use 100% union labor on all construction trades, and union labor for ongoing building operations – a commitment of hundreds of millions of dollars to union labor; - Transit – a pro-active transit program which targets a 20% reduction in single occupancy vehicle trips to mitigate impact on Seattle’s worsening traffic, as well as a commitment to extend the Mercer Cycle Track; - A place, not space – bringing our expertise at design and programming of mixed use retail spaces like the Rockefeller Center to the property, to create a vibrant and inclusive public space that is welcoming to all; - Inclusive, discounted retail – we commit to offer 50% of all retail space on the project, at 50% of the market rate, to locally-owned, minority- or female-owned, non-chain businesses, community/non-profit space, and maker space. We want to create a diverse, equitable and inclusive experience and offering at the property; - Daycare – we propose to include a daycare on the property to help alleviate the significant under-supply of care facilities that is placing such a strain on young families in Seattle today; - Public art – a commitment to spend a minimum of $2M on public art to enliven open spaces; - Differentiation by design – we will use a world-class architect for the project to ensure that the site receives a thoughtful, innovative and high-quality design that enhances the built environment.

“a once-in-a-generation opportunity to enhance the city’s built environment and to create an inclusive, sustainable, and thoughtfully-designed destination with a true sense of place, with a wide range of public and community benefits offered as part of the proposal”

We see the Mega Mercer project as the opportunity to create not just an impressive and well-executed individual development, but one which truly enhances the neighborhood and brings together our vision for creating truly unique places that positively impact the neighborhood – and city – as a whole.

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3. TISHMAN SPEYER

Tishman Speyer Introduction Tishman Speyer is a private real estate company with roots as a family business dating back more than 100 years, and today is one of the world’s leading owners, developers, and operators of first class real estate. Tishman Speyer has acquired, repositioned, developed and/or operated over $78.2 billion of property since 1978, including approximately 152.0 million sq. ft of office, retail, and residential space. Matching a global perspective with deep local market knowledge, the company focuses on prime assets located in the central business districts of key metropolitan areas across the globe. We pride ourselves on our vertically-integrated platform which allows us to keep a streamlined approach within our key function areas —design and construction, leasing, fundraising, and property management —while maintaining a local focus. A world-class team with a strong focus in the Seattle, Tishman Speyer is a highly active developer and investor and is presently entitling, designing, and building Class A office, market rate and affordable housing residential developments across the globe. With deep experience and a track record of success, Tishman Speyer’s team has the development and operating expertise to undertake projects of significant scope and complexity like the Mercer Mega Blocks sites. In 2004, the company acquired its first asset in Seattle, purchasing 520 Pike Street which we continue to own and manage today, having just completed an extensive and cutting edge renovation with local architects Olson Kundig. Our local team’s offices are based at the property. We have also bought, managed and sold Second & Seneca and Market Place I & II, representing a total commitment in Seattle of over $400M since first entering the market. While our company is headquartered in New York, we pride ourselves on operational consistency across our global gateway markets, and an extremely local focus by our regional teams. The local office is run by Leo Shapland (based in Seattle) and Carl Shannon, who is in his 21st year with the firm and sits on our Investment Committee. Tishman Speyer is renowned for excellence in design quality, innovation in development approach, a deep commitment to sustainability and the community, a leading track record of developing high-quality affordable housing, and some best-in-class examples of placemaking in urban settings. Our team is excited to put forward this proposal, and we are truly passionate about the opportunity to work alongside the City of Seattle on what we believe to be a generational, defining opportunity for the company in the region.

Mercer Mega Block | Team Bios – Corporate Executives

ROB SPEYER | Presdent and Chief Executive Officer Rob Speyer is the President and Chief Executive Officer of Tishman Speyer. He served as President and Co-CEO from 2008 to 2015. Over the past decade, he has guided Tishman Speyer’s growth into a leading global real estate investment management firm with assets under management in excess of $45 billion. Under his leadership, Tishman Speyer has delivered more than 36 million square feet of development and redevelopment across 30 markets, serving the needs of 2,300 industry-leading tenants around the world.

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Rob Speyer is currently serving the fifth year of his term as Chairman of the Real Estate Board of New York (REBNY), the city’s premier industry association. He is also Chairman of the Advisory Board of the Mayor’s Fund to Advance New York City, appointed by Mayor Bloomberg in 2006 and reappointed by Mayor de Blasio in 2014. Mr. Speyer serves on the Board of Trustees of New York-Presbyterian Hospital and St. Patrick’s Cathedral in New York City, where he was Co-Chairman of the Construction Committee overseeing its restoration and renovation. He is also a member of the Shanghai Mayor’s International Business Leaders Advisory Council. An emeritus member of the Board of Visitors at Columbia College, Rob Speyer graduated magna cum laude from Columbia in 1992 and was elected to the Phi Beta Kappa Society.

BRUCE PHILLIPS | Senior Managing Director, Design & Construction Mr. Phillips is responsible for Tishman Speyer’s design and construction activities in the United States, Europe, Brazil and India. In New York, he has been responsible for projects including Yankee Stadium, Two Gotham Center, Lehman Brothers Data Center, Hearst Tower, Citigroup LIC2, and Chrysler Center redevelopment. He has also supervised the successful completion of projects in San Francisco, Los Angeles, Atlanta, Chicago, Washington, DC, Boston, and Hyderabad. Prior to joining Tishman Speyer in 1998, Mr. Phillips spent 15 years at American Broadcasting Companies, Inc., where he directed real estate, development, design and construction projects, including ABC’s Broadcast Center and Headquarters. He graduated cum laude from Princeton University with a BA from the School of Architecture.

MICHELLE ADAMS | Managing Director, Public Affairs & Philanthropy Ms. Adams oversees communications, philanthropy, and government and community relations for Tishman Speyer. Previously, she served as the executive director of the Association for a Better New York from 2002 until 2010. Ms. Adams received a bachelor’s degree in philosophy, politics and law from the State University of New York at Binghamton, and a Master of Public Administration degree in public finance and policy from the Robert F. Wagner Graduate School of Public Service at New York University.

Team Bios – Local Team

CARL SHANNON | Senior Managing Director, Regional Executive Mr. Shannon is responsible for Tishman Speyer’s portfolio in the San Francisco Bay Area and the Pacific Northwest. He is charged with overseeing the development of various signature developments, such as Lumina, The Infinity and Mira, three condominium projects adjacent to San Francisco’s waterfront, and three office buildings at Foundry Square III, 222 Second Street and 555 Mission in the central business district. Mr. Shannon is also a member of the Investment and Management Committees. Before joining Tishman Speyer in 1998, he worked for both GE Capital and The Prudential Insurance Company of America. Mr. Shannon received an AB, magna cum laude, and graduated with an MBA, with high honors, from Harvard University.

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LEO SHAPLAND | Senior Director, Acquisitions & Development | Regional Lead, Seattle Mr. Shapland joined Tishman Speyer in 2009 and currently oversees acquisitions, development, asset management and leasing in the Seattle market. Joining the company’s London office, he worked on acquisitions and asset management, before transferring to San Francisco in 2012, where he undertook large-scale commercial renovation and lease-up projects, built the first all curtain-wall high-rise affordable housing building in San Francisco comprising 190 workforce housing units, and built multimillion-dollar programs for residential developments. He currently oversees Tishman Speyer’s Seattle office and its 520 Pike Street asset in Seattle, including the recent building renovation in conjunction with Olson Kundig. Mr. Shapland is a registered Chartered Surveyor in the UK holds an MA in Political Science from Cambridge University (UK) summa cum laude, alongside a MSc in Real Estate with honors from Kingston University.

MATT BISS | Managing Director, Design & Construction Mr. Biss joined Tishman Speyer in 2000 and currently oversees design and construction activities for the West Coast, primarily focused on the San Francisco and Los Angeles regions. During his tenure with the Company, he has managed development projects in San Francisco, Chicago, New York and Los Angeles, including Foundry Square III, 222 Second Street, the Playa Vista campus and the headquarters for a global financial giant in Lower Manhattan. Prior to joining Tishman Speyer, Mr. Biss worked in real estate development as a contractor and project manager. He holds a BA from Colorado State University.

TONY BIRDSEY | Senior Director, Property Management Mr Birdsey joined Tishman Speyer in 1999 and currently overseas the Property Management discipline for the entire West Coast. He directly supervises a staff of 15 real estate professionals, with an extended staff of 63 employees. His division is responsible for all financial and operational activities for the West Coast portfolio of existing assets, including annual budgeting, financial reporting, contract administration, and tenant and capital improvement supervision. In addition, he supports the acquisitions, development, and leasing divisions within Tishman Speyer. Mr Birdsey has combined experience totaling 28 years in the commercial real estate industry. He has worked in a variety of domestic and international markets. He currently holds several industry designations including a RPA and LEED certification. He obtained his BA degree in Landscape Architecture and a MBA in Finance from the University of Wisconsin – Madison.

ALLISON DELONG| Director, Property Management Ms. Delong joined Tishman Speyer in 2004 and is responsible for all operational aspects of 520 Pike in Seattle. She directly supervises a team of 5 engineering and property management staff, as well as 6 security professionals and 11 cleaning team members. Additionally Ms. Delong manages all aspects of Tenant Improvements for the 50+ office tenants at 520 Pike, and oversees parking garage operations. Ms. Delong holds

8 TISHMAN SPEYER | MEGA MERCER RFP RESPONSE an RPA Designation and has been an active member of BOMA, having served on the board of directors from 2003 through present. A Seattle native, she obtained her BA degree in Business Administration from Western Washington University.

NICHOLAS ALIMAM | Associate, Acquisitions & Development Mr Alimam is member of the acquisitions and development team, helping to pursue new development and investment opportunities in the Seattle and San Francisco regions. Previously, Mr. Alimam was with Newmark Knight Frank’s Capital Markets team focusing on investment sales and acquisitions. He holds dual bachelor degrees in economics and political science, where he graduated with honors.

In addition to the team members identified above, Tishman Speyer has a wealth of development and design and construction professionals who may work on the Mercer Mega Blocks development depending on future needs.

These individuals include:

▪ Chuck Wright, Senior Director – Design and Construction (14 Years with Tishman Speyer) ▪ Sandy Reek, Senior Director – Design and Construction (10 Years with Tishman Speyer) ▪ Steve Minden, Senior Director – Design and Construction (11 Years with Tishman Speyer) ▪ Andre Krause, Director – Design and Construction (4 Years with Tishman Speyer) ▪ Oscar Guzman, Project Manager – Design and Construction (11 Years with Tishman Speyer) ▪ Ming Lo, Project Manager – Design and Construction (3 Years with Tishman Speyer)

Corporate Capabilities Tishman Speyer is a private real estate company with roots as a family business dating back more than 100 years, and today is one of the world’s leading owners, developers, operators, and investment managers of first class real estate. Tishman Speyer has acquired, repositioned, developed and/or operated over $78.2 billion of property since 1978, including approximately 152.0 million square feet of office, retail, and residential space. Matching a global perspective with deep local market knowledge, the company focuses on prime assets located in the central business districts of key metropolitan areas across the United States, Europe, Brazil, China and India. We pride ourselves on our vertically-integrated platform of professionals, allowing us to keep a streamlined approach within our key function areas — design and construction, leasing, debt and equity capital markets, and property management — while maintaining a local focus.

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Note: Headcount figures reflect Real Estate Professionals as of 04/30/2016 AUM and Investments are as of 03/31/2016

NORTH AMERICA EUROPE BRAZIL CHINA INDIA TOTAL

Professional 491 Professional 121 Professional 107 Professional 184 Professionals 44 Professional 941 s s s s s AUM $30.5 AUM $6.1 AUM $1.3 AUM $3.9 AUM $284.3 AUM $42.1 (billions) (billions) (billions) (billions) (millions) (billions) Assets 66 Assets 29 Assets 14 Assets 5 Assets 4 Assets 118

With real estate expertise spanning four continents, Tishman Speyer has built an international reputation for both developing and owning prominent properties with world-class tenant rosters in major markets worldwide, including such well-known icons as New York City’s Rockefeller Center, Chrysler Center, Yankee Stadium, and MetLife Building, Boston’s 125 High Street and One Federal Street, Frankfurt’s MesseTurm and OpernTurm, Berlin’s Sony Center, Sao Paulo’s Torre Norte, and Ventura Corporate Towers in Rio de Janeiro. Tishman Speyer’s integrated team of over 1,033 investment professionals (including 223 design and construction experts) in 19 offices worldwide is dedicated to creating exceptional environments for both tenants and residents as well as the general public that regularly visits its properties. Today, Tishman Speyer leverages the deep knowledge of global economies and property markets of its in-house real estate professionals and worldwide network to oversee a $39.0 billion global real estate portfolio of over 66.3 million square feet.

Why Tishman Speyer Tishman Speyer benefits from a vertically integrated platform, which integrates the expertise of its worldwide professionals within all of its business lines, while remaining committed to a local focus in each of our markets. Combining all of our core disciplines and sharing knowledge allows Tishman Speyer to replicate successes, share lessons learned, make firm-wide commitments to sustainability milestones, encourage an unwavering approach to design quality and innovation, and create operational efficiencies at the individual property level. Extensive in-house capabilities include:

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▪ Acquisitions ▪ Asset & Portfolio Management ▪ Design & Construction (including Sustainability) ▪ Local Leasing & Marketing ▪ Business Development & Global Leasing ▪ Property Management ▪ Debt Capital Markets ▪ Equity Capital Markets ▪ Tax, Accounting, Risk Management & Legal

Design and Construction Capibilities Tishman Speyer has an extensive, experienced in-house team of engineers, architects and project managers who work as part of an integrated real estate organization to deliver buildings on time and on budget. Since 2006, Tishman Speyer has delivered approximately 38 million square feet of development and redevelopment globally – roughly equivalent to the entire Seattle downtown Class A office market – including major tower buildings such as Frankfurt’s OpernTurm, Atlanta’s Two Alliance Center, and Rio de Janeiro’s Ventura Corporate Towers. We believe the value-add in our design and construction capabilities lies in the following skill set:

▪ Expertise on Complex Mixed-Use Sites: In-house design team and construction professionals with extensive breadth and depth of knowledge on all parts of construction process, from planning and design applications to practical completion. ▪ Understanding Current Construction Market: Close and active relationships with top- tier main contractors, construction managers and trade contractors. ▪ Design Management: Intense systematic approach to review of design documents and value analysis programs. ▪ Bringing Predictability to the Process: Rigorous control of tender and award of contracts. Sets tone early on cost control. ▪ Global Buying Power: As a result of our global development program, we have worked with the world’s major suppliers of curtain walling, elevators and escalators, plant and equipment, and insurance. The breadth of our global development footprint ensures our buying power with suppliers.

Leasing and Corporate Outreach: A Global Network As part of a fully integrated real estate operating firm, Tishman Speyer’s global team of over 60 leasing professionals are responsible for developing and executing leasing strategies for each asset. Having an internal, on-the- ground leasing staff facilitates an understanding of local tenants and their

11 TISHMAN SPEYER | MEGA MERCER RFP RESPONSE needs, and better aligns leasing efforts with each asset’s particular business plan in a way that outsourcing this function does not.

An independent global leasing team maintains corporate-level relationships with Tishman Speyer’s largest tenants, representing some of the world’s most significant users of space. This effort focuses on establishing direct relationships with the world’s largest occupiers of commercial real estate, many of whom have centralized their space decisions. Major domestic and multinational corporations generally value the ease of doing business with the same owner in multiple locations and view consistent ownership as a strong positive as they seek to meet their space requirements worldwide.

Tishman Speyer professionals thoroughly assess the local market and the characteristics of tenant demand. Regional leasing teams have real-time information on what tenants want, and the ability to adjust to evolving needs. Tishman Speyer’s regional leasing teams focus on building direct relationships at the corporate level with over 250 corporate real estate executives from the world’s largest occupiers of commercial real estate, creating a unique competitive advantage. Local, in-house leasing teams manage a global portfolio of over 2,300 tenants. Currently, 39% of Global Fortune 100 and 23% of Global Fortune 500 companies are Tishman Speyer tenants. Fundamentally, for a large site like the Mercer Mega Blocks, our in-house leasing team would focus intensively on pro-active and creative marketing campaigns early on to maximize the chances of the project becoming leased by high-quality tenants, and therefore developed and occupied in the shortest time period possible.

Property Management Each of our properties is treated as a standalone business with its own team of in-house property management experts. This approach ensures superior operational and maintenance standards, which translate to clean, secure, well-maintained properties managed to the standard of premier, owner-occupied buildings. Our team of 440 in- house property management specialists manages over 95.2 million square feet of Class A office, residential and mixed-use properties in 30 markets around the world, overseeing all aspects of our buildings’ operations, including engineering, security, fire safety and maintenance. Key features that drive value and maximize efficiency:

▪ Property Management is fully integrated in the acquisition, design, development and asset management process; ▪ Operating buildings more efficiently and sustainably, highly leveraging engineers and using automated and digitized systems that allow ongoing analysis and operational improvement; ▪ Ensuring all critical systems and equipment are operating optimally within the design criteria and manufacturer’s recommendations; intense systematic approach to review of design documents and value analysis programs to ensure optimal efficiency of operations.

An Extensive Track Record of High-Quality Affordable Housing Development Tishman Speyer has a well-established track record as a leading developer of high-quality affordable housing in urban locations. We are the largest for-profit developer of affordable housing units in San Francisco, with almost 1,000 units scheduled to deliver in the city over the coming years. We have a depth of experience and

12 TISHMAN SPEYER | MEGA MERCER RFP RESPONSE understanding of the many complexities around design, financing, and operational requirements of affordable housing that we would bring to the Mercer Mega Blocks, a successful history of collaborative partnerships with non-profit partners and public/political stakeholders, as well as replicating our commitment to building high- quality, attractive affordable developments.

Relevant Affordable Housing Experience • Mira – San Francisco, CA: 156 units, or 40% of the 400 foot tall / 390 unit high-rise, will be delivered on-site as affordable units. Designed by renowned architect Jeanne Gang, the development is located in downtown San Francisco with a market-leading on-site amenity package shared by residents. The project is under construction and estimated to be completed in 2019. • 1400 Mission Street – San Francisco, CA: this 100% affordable 15 story project was delivered affordable. San Francisco’s first all-curtainwall affordable housing project. On-site amenities include coffee shop, food retail, community room, bike room, EV chargers, plus two landscaped, family-friendly resident-only roof terraces with views over San Francisco. The project was delivered in 2015. • 888 7th – San Francisco, CA: 224 unit development completed by Tishman Speyer in partnership with AF Evans in 2008 comprising 164 off-site affordable units as part of Tishman Speyer’s commitment to affordable housing through the Infinity development, and 60 “workforce housing” units. • Mission Rock – San Francisco, CA: 40% of the 1,350 / 28 acre mixed-use project will be delivered as affordable, comprising 532 units, across a wide variety of AMI levels and unit sizes. The project also includes 24 Transitional Aged Youth units aimed at 18-24 year olds who are particularly vulnerable and at risk of homelessness or correctional facilities. The project is estimated to be completed by 2023. • 5th & Howard – San Francisco, CA: 300 affordable apartment units located in the heart of San Francisco’s SOMA district. The project is currently being designed and is estimated to be completed by 2021.

1400 Mission Mira Mission Rock 5th & Howard San Francisco, CA San Francisco, CA San Francisco, CA San Francisco, CA 187 Units 137 Units 367 Units 300 Units

In addition to the development expertise in-house, Tishman Speyer has also been successful in parterning with local non-profit organizations in the development of affordable housing projects. Among the list of groups, notable partnerships include AF Evans Company, the Tenderloin Neighborhood Development Corporation (TNDC), and the Office of Community Investment and Infrastructure. These organizations have a mission to develop communities and provide affordable housing and services for people with low and very low incomes throughout San Francisco, as

13 TISHMAN SPEYER | MEGA MERCER RFP RESPONSE well as promote equitable access to opportunity and resources – a core theme to our development approach on the Mercer Mega Blocks.

Should the ultimate development plan for the Mercer Mega Blocks include affordable housing, Tishman Speyer will partner with a leading provider of affordable housing services to ensure high-quality inclusive housing that is well designed, and offers residents a high-quality space that they are proud to call home.

We have had positive and exciting initial discussions with Bellwether Housing to partner on the site, offering the chance to combine Tishman Speyer’s development expertise, capital availability, and construction management with Bellwether’s operational, management and community outreach expertise.

An endorsement from Bellwether Housing for this bid is included in Section 9 of this RFP response.

Corporate Commitment to Sustainable Development

As an international developer, Tishman Speyer is acutely aware of the various LEED environments in which it builds, owns and, operates. Sustainability is at the core of Over 75% of our LEED certifications our business and we view sustainable – and healthy – building design and are LEED Gold or Platinum development as increasingly critical to our future. The result of this belief has been LEADERSHIP our commitment to delivering beautiful, healthy, and efficient buildings since our Over 52 million square feet of inception in 1978. As a global leader in the marketplace, we have a responsibility to LEED/HQW/BREEAM certified space, ensure that sustainability is an integral part of our operations, beginning with ranking us as a global leader in sustainability updating and protecting our historical properties and extending through our new developments. We have an extensive track record of pursuing sustainable TRAINING certifications across the globe in order to ensure that our properties are positive Over 70 employees worldwide with LEED and/or STEP credentials fixtures in the surrounding community, and each of our last five commercial office buildings in California achieved a LEED Gold certification, a concept that will be FIRST employed for the Mercer Mega sites. LEED Gold for for an Existing Building in New York – 375 Hudson Street

Looking forward, we are confident that through collaboration with our stakeholders LEED Gold building in South America and supply chain partners we can continue to uncover new opportunities and deliver – Rochavera Corporate Towers, Brazil efficient solutions for our properties. Being transparent with our tenants, identifying innovative solutions, having a clear vision of sustainable management and Triple-rated (LEED, HQE, and BREEAM) multi-tenant existing collaborating with our commercial partners and local communities are practices at property globally – Tour Esplanade, the foundation of how we operate our buildings. We also understand that the value France of a building depends on more intangible factors, such as how the building and its LEED Platinum tower in Frankfurt – environment feel as a place to live, work, and visit. The connection between Taunusturm, Germany elements such as air quality, lighting, and human health and productivity are becoming more evident within the broader real estate industry and has become as ENERGY STAR important to us as implementing the lastest technology or aesthetic design. 68% of eligible US properties are in the top quartile of energy efficiency in the country

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TISHMAN SPEYER | MEGA MERCER RFP RESPONSE

We believe there are opportunities to leverage cutting-edge technology and industry-leading operational and construction capabilities at every stage to further our sustainable practices around the world. Our vertically- integrated platform seeks to incorporate our expertise in the following capacities:

▪ Design and Construction – our skilled design and construction professionals’ extensive experience enables them to build creative, state-of-the-art solutions for new developments and building refurbishments across all asset classes. Green building is a key feature for all new construction projects – our team of in-house experts ensures the integration and implementation of sustainable features in new developments. In practice, this means continually questioning whether more can be done at every stage, from minimizing waste in the construction phase to pushing the building’s design and equipment to its maximum potential once operational. ▪ Transparent Management – we track and report consumption data and participate actively in global sustainability programs, such as the Global Real Estate Sustainability Benchmark (GRESB). ▪ Leasing – our leasing experts seek to educate tenants on the sustainable features that our buildings provide and offer suggestions on how to add green components to their space. In each of our markets, the leasing team’s continuous dialogue with tenants, brokers, and other operators helps us in gathering real-time market knowledge to meet users’ future sustainability demands and requirements. ▪ Property Management – our in-house team of property managers and building staff strive to weave sustainability into all aspects of our buildings’ operations. Our property managers ensure that our contractors and suppliers are aware of our specific project sustainability goals. Our engineers use sub- metering and real-time energy monitoring to identify and quickly correct inefficiencies, providing significant reductions in total costs to our tenants, and reducing consumption.

Recent Initiatives Promotoing Sustainability Sustainable technology is a rapidly evovling field, requiring flexibility during and after building construction in order to take advantage of innovations that may not have been widely available during the design phase of a new development. As such, we are constantly exploring new methods and best practices and expanding them across our global portfolio. Recent examples include:

▪ WaveRock (Hyderabad) – While Phase I and II of the business park project were awarded LEED Gold upon completion in 2010 and 2013, respectively, the property management team embarked on a number of improved efficiency initiatives in early 2014, including the reconfiguration of sewage treatment plants to reduce consumption, installation of solar panels, and lighting fixture upgrades to LED. The LED project alone has reduced lighting consumption by 56%. With 80% of the water at the building reused, the team’s experience in efficient water use and recycling has since been applied to assist teams in other markets. ▪ TaunusTurm (Frankfurt) – TaunusTurm is the first LEED Platinum building in Frankfurt and represents a new standard for energy-efficient construction and development. The building’s design incorporates innovations such as a breathable façade, highly efficient chillers driven by district steam, LED lighting throughout the entire building resulting in a 20% reduction in energy costs, thermal storage using sprinkler tanks, and state- of-the-art systems management software. Over 90% of waste was diverted from landfill during construction and the building operates at a 35% energy saving compared to similar sized buildings in Germany.

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▪ Foundry Square III (San Francisco) – Our office development at Foundry Square III features one of the largest indoor living walls in the US. This feature has become one of the most talked-about elements of the building, with tenants regularly commenting on the look and improved air quality. ▪ Mira (San Fransciso) - Tishman Speyer is proud to be a leader in water conservation efforts, both for practical design of residential and office projects and for sustainable recycling of water resources once used. Mira is a 391-unit high rise residential project currently under construction and is one of Foundry Square III living wall the first developments in San Francisco to include grey water

collection, treatment, and reuse. Its design includes rainwater and grey water harvesting with a treatment plant sized to satisfy the daily flow requirements of all flushing fixtures (urinals and toilets). Other large Tishman Speyer residential and office projects in the early phases of design development are being carefully examined in terms of not only meeting the ordinances of the local jurisdictions, but demonstrating the very best practices of water conservation necessary to set the leading standard in the country.

Excellence in Design Tishman Speyer is renowned worldwide for its commitment to high-quality architecture and design, bringing leading architectural talent from across the globe in to the markets where we operate, creating truly special destinations that positively enhance the area and broader built environment. We are currently working with some of the world’s most talented and noted architects – many of whom would be exciting new additions to the Seattle design scene – to combine their vision and our development expertise on sites across the globe.

We believe that interesting and high-quality architecture helps set our brand apart, attracts tenants and visitors to our buildings, and contributes to the local built environment in a way that unaspiring architecture fails to do. Further, good design does more than create an attractive building for its owners and occupiers – thoughtful and forward-thinking design and programming can ripple beyond the boundaries of the site and improve the area as a whole – a key tenet of our approach to the Mercer Mega Blocks.

LinkedIn Tower, 222 Second St, SF; designed by Tom Phifer 520 Pike St – Tishman Speyer and

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Commitment to Union Labor Tishman Speyer has a long track record of developing large-scale, highly visible projects like the Mercer Mega Blocks using union labor, totalling many billions of dollars in construction cost commitments to support represented labor on our sites. Further, we are continuing similar commitments on many of our current and future pipeline, as well as having a strong track record of using unionized labor for ongoing operations and maintenance, an area often largely made up by immigrant, minority and underrepresented groups.

We look forward to bringing this long track record of union commitments to the Mercer Mega Blocks sites through our vertically integrated platform of development and operations, as set out below in Section 5.

Tishman Speyer Seattle Tishman Speyer has had a presence in Seattle since 2004, purchasing 520 Pike Street which we continue to own and manage today. We are just completing an extensive, transformational renovation with local architects Olson Kundig, drawing heavily upon Pacific Northwest influences, representing one of Tishman Speyer’s key characteristics that we bring to our markets – marrying world-class architecture with local tastes and influences.

Interior lobby shot and exterior shot of renovated 520 Pike St; Tishman Speyer & Olson Kundig

In Seattle, we have also bought, managed and sold Second & Seneca and Market Place I & II, representing a total commitment in Seattle of over $400M since first entering the market.

While we do not currently have any large future development projects in the pipeline in Seattle, selection of Tishman Speyer as developer for the Mega Mercer site would eliminate any potential conflicts with other developers and their pipeline of developments in South Lake Union, which might precede the development of the Mercer Mega Block sites in terms of staffing focus, timing or priority. Selecting Tishman Speyer as developer for Mega Mercer ensures that the site would be given the utmost priority and attention by both our local and national teams, ensuring timely development, while leveraging the vertically integrated platform and expertise of our organization.

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4. FINANCIAL QUALIFICATIONS

Requested information for RFP Requirements, Financial Qualifications have been submitted under separate cover per the instruction in the RFP.

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5. PROJECT CONCEPT AND PUBLIC BENEFITS

The Mercer Mega Block sites represent a once-in-a generation opportunity to create a truly special, inclusive and thoughtfully designed set of buildings at the gateway to South Lake Union. It also comes at a time of great change for Seattle, where the significant benefits arising from rapid growth in employment, population, incomes and wealth is not being shared equally by all sectors of society, and where infrastructure and the natural environment is under increasing pressure to keep up with rampant growth. When evaluating the Mercer Mega Block opportunity, we have attempted to balance the requirements of Seattle and its residents, while enabling continuing employment growth and competitiveness through development, alongside the need to drive as much economic value as possible for the City from the site. As such, our approach to the site has evaluated a wide-ranging spectrum of different development plans, but fundamentally focused on two key approaches:

OPTION ONE: Mixed Commercial Office Development Across Entire Site – Retail, Office and Lab The Seattle office market continues to go from strength to strength. As local companies continue to grow, as employers increasingly choose to locate in urban, highly-amenitized environments over the suburban alternatives, and as companies move in to the region to tap in to the ever-growing pool of talented labor, the available supply of office space has continued to dwindle. As such, options available to tenants are shrinking – particularly for tenants seeking large blocks of space, for lower rent paying and non-profit tenants, and for specialty tenants like life science users who are frequently outcompeted by technology companies with deep pockets. South Lake Union is at the heart of one of the nation’s fastest growing office markets, and within that, the Mercer Mega Blocks represent a compelling office development site to meet the demand of tenants seeking space in this world-renowned innovation hub. Further, the scale of the Mercer Mega Block creates the opportunity to develop large floorplates on the lower floors that are highly sought after by larger innovation tenants that value collaboration across a single floor or block of floors, along with smaller floorplates in the towers above that maximize views, natural light, and accommodate users with smaller space requirements. With available office space in South Lake Union beginning to diminish, and rents increasing rapidly, tenants are increasingly looking outside of Seattle – be it Bellevue and the Eastside, or locations further afield – to find space that matches their growth trajectories. Seattle has emerged as a leading global hub for technology, innovation, and science with a highly skilled and diversified talent pool, whose success is contingent upon the ability to create and retain jobs – and an available supply of office space to house this growth is critical to the city’s ongoing success.

“Seattle has emerged as a leading global hub for technology, innovation, and science… an available supply of office space to house this growth is critical to the city’s ongoing success.”

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Conversely, the pipeline of new residential units – particularly multi-family rental units – remains full and continues to grow. While Seattle is experiencing phenomenal job growth and in-migration – creating a steady stream of ongoing demand for places to live – this large supply of residential development has led to rents that are beginning to peak (if not already having peaked). In conjunction with the large lower floors which are harder to program for residential use given the depths between elevator cores and the window line (making for darker residences and under-utilized space on the interior of the floorplate), along with market resistance among condominiums buyers for homes on a ground lease (should the City pursue that transaction structure), we eliminated an all-residential scheme from our plans. As such, we feel that the highest market value sale for the City can be achieved by an office-led development plan, where a curated retail mix is focused on the ground plane along the street-facing perimeter of the sites and along the newly extended 8th Avenue North – creating amenities for the property and surrounding neighborhood, destination retail that befits the quality of the site, and first and foremost an inclusive and inviting destination for all – with office and/or lab space users occupying the floors above. We have based our design approach for Option One around a mixed office and life science development plan, whereby we have laid out and specified the Mercer East and West podium floors so that they can accommodate either a life science approach or a more ‘typical’ office user, without sacrificing functionality or the attractiveness of the space for either group. Incorporating life sciences is a key goal for our development plan, not just as a means to diversify the building’s potential tenant base given the strong presence of life science users in the vicinity, but also as a means to facilitate the continuation of South Lake Union’s emergence as a life science hub – solidifying the ongoing creation of a true scientific talent hub akin to those that have driven so much success to the Boston and Bay Area regions from users occupying space in close proximity to each other. Under our design development studies to date, Tishman Speyer’s Mega Block development plan could incorporate – as part of the larger scheme – almost 300,000 square feet of life science uses, accommodating up to 1,000 scientists and researchers in world class lab space. ‘Traditional’ office users can be accommodated in the space above, as well as in the potential lab elements of the building, ensuring true flexibility of the development, increased likelihood of leasing the space, and the opportunity for a mixed use environment across the site. On the 615 Dexter site, under this all-commercial scenario we have programmed an 11-story, approximately 200,000 square foot ‘traditional’ (non-lab) office building, with highly efficient, smaller floorplates above a ground plane level of retail, lobby and access space. Given the difference in size – both for the building overall and of the individual floorplates – between the Mercer Block offices and the Dexter office schemes in our plan, we believe that the Dexter site could feasibly be developed contemporaneously with one or both of the Mercer Blocks should market conditions dictate for ongoing tenant demand for South Lake Union office space. This – in combination with a partial lab execution – would thereby ensure that the sites would have more varied development plans with consequent timelines that mitigate the amount of ‘down time’ as vacant or underutilized lots, thereby bringing forward the creation of construction jobs, office and retail jobs, community benefits, and tax revenues associated with the completed buildings.

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Summary of estimated potential development plan – Option One: mixed commercial office development: Lab Levels Height Gross Enabled Retail / Maker Below OPTION ONE Stories (ft) Sq. Ft Space Office Space Grade Mercer West 14 175 490,000 100,000 320,000 18,000 3 Mercer East 14 175 410,000 190,000 168,000 39,000 3 615 Dexter 12 172 210,000 200,000 10,000 3 TOTAL 1,110,000 290,000 688,000 67,000 nb gross square feet includes amenity, outdoor and accessible roof space, and common spaces

OPTION TWO: Mixed Use Commercial Office on Mercer Blocks, and Affordable Housing on 615 Dexter Site

Seattle’s exponential growth and breathtaking influx of new residents has led to significant job, income and wealth growth for Seattle as a whole, but has also created a strain on many parts of the city – infrastructure demands, congestion, service provision, the natural environment, and perhaps most acutely, housing provision. As rents and home prices have risen dramatically over recent years, along with other costs of goods and services, many parts of the city – including those whose jobs are fundamental to the health, safety, education, caregiving and day-to-day functioning of Seattle – have not been able to keep up and have been priced out of the city. Tishman Speyer operates in gateway cities across the world where a similar dynamic has been witnessed; as urban centers grow and overall wealth booms, but where segments of the populace who are no longer able to afford to live in the city they serve or grew up in. We believe that the fundamental, ongoing success of cities like Seattle includes a commitment to house and support a cross-section of society and create an equitable and Clockwise left to right: mixed-demographic environment – MIRA – 40% of units both from a pure principle of fairness, affordable; designed by Jeanne as well as a means to ensure ongoing Gang long term success of the city as an 1400 MISSION – family- appealing place to live and work for a oriented BMR building by Twitter’s global HQ cross-section of society. 888 7th – 224 affordable units in SOMA Nowhere has witnessed this more MISSION ROCK – 40% of units acutely than San Francisco, where affordable (532 units), inc. 24 Tishman Speyer is a leading owner, Transitional Aged Youth units operator and developer of commercial, mixed use and residential developments. In San Francisco, Tishman Speyer is the leading for-profit developer of affordable and below market rate housing, and is currently in the process of developing almost 1,000 units of below market rate (BMR) housing, largely serving households in the 45-120% AMI bracket, however also including 150% AMI ‘workforce’ housing (an often overlooked section of the

21 TISHMAN SPEYER | MEGA MERCER RFP RESPONSE affordable housing spectrum), along with Transitional Aged Youth housing for the particularly vulnerable demographic section of 18-24 year olds who are transitioning from public systems (like foster care) or are at risk of homelessness or correctional facilities.

All of our affordable housing sites have been developed in highly-sought after central, urban, and mixed use buildings or urban settings, at a high-quality execution, and with a range of amenities including on-site retail, roof decks, secure children’s play areas, parking & EV charging stations, bike rooms, gyms, and community rooms.

At the Mercer Mega Block site, we are able to draw upon our deep track record and experience of affordable housing development to create an exclusively below market rate development on the 615 Dexter site. Per the City’s stated requirements, our development plan contemplates 175 BMR units on 615 Dexter, comprising at least 50% 2- and 3-bed units – aimed at accommodating families within the city who would typically be priced out of the urban core. Units are intended to be kept permanently at these restricted affordability levels. Intended average AMI for the units is 60%, providing the opportunity to balance the housing needs of particularly low-income residents and families, alongside “workforce” housing for the “missing middle” (teachers, police, firefighters, nurses, and so on), while retaining as much value for the City from the land sale as possible. This balanced approach offers the opportunity to create stable, long-term homes for families and individuals who are often overlooked in the city’s

“175 units, comprising at least 50% 2- and 3-bed units at 60% average AMI for 50 years, providing the opportunity to balance the housing needs of particularly low-income residents and families, alongside workforce housing for the missing middle and people that serve and care for Seattle” current economic boom.

In order to reduce impact on the already congested access routes of Mercer and Dexter, to encourage transit ridership and sustainable use of the site, and reduce development costs to allow a feasible affordable housing development1, parking envisaged for the property is deliberately limited to one level of parking below grade, providing around 50 projected spaces, car sharing spaces, ADA reserved spaces, and electric vehicle charging stations. Ample secure bike storage space will be provided within the building, freeing up space within residents’ units and encouraging bike use on Seattle’s growing bike lane network (including the Mercer cycle lanes).

In addition to the building’s lobby, our ground floor development plan for the affordable housing site on 615 Dexter includes around 10,000 sf of retail (facing Dexter and Roy) and community / maker space on Roy – discounted at 50% of market retail rents to incentivize community and non-profit uses – and help amenitize the building and neighborhood, bring life and vibrancy to the streetscape, and create a mixed-use space where residents, office workers and visitors to the neighborhood can mingle in an inclusive and diverse environment.

“our affordable housing development plan for the Dexter site includes around 10,000 sf of retail space facing Dexter and community / maker space on Roy discounted at 50% of market rents to incentivize community uses and create an inclusive, vibrant and diverse environment”

1 Based on our due diligence on the site and cost appraisal studies completed to date, we are aware of have accounted for some known constraints around groundwork, shoring of Aurora and Dexter avenues, constraints around bringing utilities in to the site’s below grade areas, and proximity to major thoroughfares – and their material impact on construction costs and timelines.

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Under our development plan we would commit to creating an indoor / outdoor amenity area within the building that provides residents with an outdoor roof deck retreat from the urban surroundings, alongside resident-only common spaces that provide a place to create a community within the building and a safe space for children to play (given the family orientation of the development plan).

Resident-only roof decks at 1400 Mission St, Tishman Speyer’s recent 100% affordable housing development In addition, we commit to building a housing development that is of comparable build and design quality to market rate housing developments in the vicinity. We believe that in an equitable society a lower income should not have to result in a lower quality or inferior place to live, and we commit to making 615 Dexter development a high-quality building that people are proud to call home.

1400 Mission St interior finishes

We have had positive and exciting initial discussions with Bellwether Housing to partner on the site, offering the chance to combine Tishman Speyer’s development expertise, capital availability, and construction management with Bellwether’s operational, management and community outreach expertise.

Bellwether Housing has endorsed our proposal and our approach – included in Section 9 of this RFP response.

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Summary of estimated potential development plan – Option Two: mixed commercial & affordable development: Lab Permanently Levels OPTION Height Gross Enabled Retail / Affordable Below TWO Stories (ft) Sq. Ft Space Office Maker Space Units Grade Mercer West 14 175 490,000 100,000 320,000 18,000 3 Mercer East 14 175 410,000 190,000 168,000 39,000 3 615 Dexter 14 145 - - - 10,000 175 1 TOTAL 900,000 290,000 488,000 67,000 nb gross square feet includes amenity, outdoor and accessible roof space, and common spaces

More detail on our initial design for both development plans is provided in Section 6 – Project Design.

Commitment to the Community Regardless of development approach, all of our proposed strategies emphasize and prioritize a wide range of public benefits and commitments to ensuring that the development is thoughtfully designed, sustainable, inclusive and equitable. We commit to the following within our development plan for the sites: Sustainability As a company policy, all of Tishman Speyer’s new developments are required to meet or exceed stringent sustainability standards (LEED Silver at a minimum, typically LEED Gold or higher). With almost 69 million square feet of sustainably-certified and operated properties across the globe, Tishman Speyer is a global leader in sustainably constructed and operated properties. Besides being the right approach for protection of the environment and our natural resources, we believe a sustainable approach enhances financial returns by improving the ability to attract and retain tenants – making sustainability a key tenet of how we run our business in all the markets we operate in. For the Mercer Mega Block, we commit to the following sustainability measures: - LEED Gold development – and operating – standards: Building a building ‘green’ is a key component in environmental good practice and sustainability and ensuring the foundations of sustainable management of the building going forward, but how that building is operated over the long term is a fundamental component in conserving energy and the natural environment. We commit to developing and operating the development at a minimum LEED Gold standard. - Salmon Safe – we commit to developing and operating the property as a “Salmon Safe” development, to help protect Puget Rooftop solar at Rockefeller Center Sound’s waterways, keystone aquatic species, and the entire ecosystem that depends upon a healthy marine environment. - District heating – a project of this magnitude has the potential for an Eco-District approach to leverage unique efficiencies that a development of this scale provides. Central On-Site Water Treatment and reuse for majority of non-potable water demands is one potential Eco-District opportunities available, complimenting a

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range of approaches to minimize water usage within the building. In addition to this, construction of a Central Energy Plant is a potential strategy to provide the buildings with efficiently produced chilled water for building cooling, as well as centralized hot water for building heating and domestic hot water demands. This strategy seeks to take advantage of operational diversities between commercial office and retail uses (as well as potentially the residential uses on 615 Dexter, if feasible to bring utilities across Dexter), centralize major cooling and heating equipment in one location on the site, and minimize cooling tower water use associated with generating cooling for buildings – resulting in energy reduction and savings for tenants. We are implementing this strategy at a number of our development projects and would seek to take a similarly innovative district heating approach to the Mercer Mega Blocks to enhance sustainability of the sites’ development. - Rainwater recycling – with changes in climate and precipitation patterns – notably longer, hotter and drier summer periods without rain – water conservation is an increasingly important part of a sustainable approach to managing buildings and mitigating their impact on the environment, both for practical design of residential and office projects to reduce water consumption, and for sustainable recycling of water resources once used. Tishman Speyer is proud to be a leader in water conservation efforts across our global portfolio. We are currently developing Mira, a 392 unit high-rise residential project in San Francisco that is the city’s first residential high-rise to include on-site grey water collection, treatment, and reuse. Its design includes rainwater and grey water harvesting with a treatment plant sized to satisfy the daily flow requirements of all flushing fixtures (toilets and urinals). We are implementing this innovative approach to water management strategies across other Tishman Speyer projects in the early phases of design development, and we commit to bringing our innovative best practices of water conservation on the Mercer Mega Block site. - Green roofs, and cool roofs – green roofs and cool roofs (reflective, heat reducing roofs) offer a wide range of benefits to both the individual building, and the broader surroundings as a whole. Green roofs improve a building’s sustainability profile by reducing energy usage (reducing heat gain in summer, and heat loss in winter), reducing heat island effect from urban environments; filtering, slowing and mitigating rainwater runoff and demands on public infrastructure (and impact on water ecosystems); improving air quality by trapping dust and particles; and supporting a host of wildlife that would otherwise not be present on a typical hardscaped roof – improving biodiversity. Our development plan for the Mercer Mega Block sites offers the ability to provide sizeable green roof spaces and landscaped terrace areas across all portions of the site. In combination with the adjacency to Lake Union and other sustainability measures set out in our proposal, the positive impacts around water runoff mitigation and biodiversity will be further Making honey on our Paris enhanced by this approach. Bourse rooftop As a result, we commit to making 50% of all non-mechanical roof space on the Mercer Mega Blocks green roofs and landscaped areas – equating to an area larger than Westlake Park dedicated to planting and green areas. - Local & native planting – beyond just offering a large area of planted and green space across the site, we also propose to use native plant materials that foster biodiversity, reduce water and irrigation consumption, and

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at the ground plane, create a sense of local identity that draws upon the nature and beauty of the Pacific Northwest. Subject to further discussion and agreement with the City planning and design review boards, we would propose a richly-planted, Pacific Northwest-inspired approach to the 8th Avenue North extension, to enhance the appeal, design and destination effect of the proposed retail corridor, which grounds the development in the local Seattle environment. - Transportation – reducing single occupancy vehicular transport is a key goal of our development plan, to reduce emissions and mitigate the impact of the development on the surrounding streets, particularly Mercer Street where traffic regularly chokes the street. Fundamental to this is a pro-active strategy around vehicular use mitigation similar to those we have used on a variety of different urban projects, such as: o Comprehensive and appealing bike facilities (not just storage, but repair stations, showers, and lockers that encourages people to use their bikes); o Car pool & car share incentive schemes – priority parking for car share and car pool vehicles, extensive availability of car share services on site, with app control or valet service to reduce perceived barriers to usage; o Shuttles to light rail and mass transit hubs – potentially in conjunction with adjacent sites in the vicinity to boost ridership and usage, shuttle and car share drop off spaces outside the building; o Employee mass transit incentive schemes in conjunction with our tenants and occupiers; o Electric vehicle charging stations (including supercharging stations) to encourage cleaner vehicle usage. These, along with other creative approaches used elsewhere in our portfolio, are often highly effective strategies that we would employ to reduce the project’s impact on the environment and public infrastructure. Further, our development plan intentionally envisages parking at levels below those stipulated by code, to emphasize this commitment to alternative transit and sustainability, and recognizes the presence of underground sewer on the Mercer East and West blocks (and requirement to bridge over the Verde, London – we removed all parking sewer) which makes extensive below-grade parking unrealistic. spaces; replaced with bike facilities Through the above strategies, we propose targeting a 20% reduction in single occupancy vehicle trips from the site (measured on a trips per occupant basis, compared to a typical South Lake Union development with code compliant parking ratios).

We have had positive initial discussions with the Cascade Bike Club on our proposal, and a potential partnership to bring about our multi-model approach to reducing traffic impact from the site, our commitment to state-of-the-art bike facilities and encouraging bike use. The Cascade Bike Club has endorsed our proposal and the commitments we are making, and their endorsement is included in Section 9 of this RFP response.

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Retail and Place-Making The success of projects which really stand out, engage with the public, and create a mixed and inclusive public- private environment frequently hinges on the retail programming and activation at the ground level. Almost more than any other building in the nation, one of Tishman Speyer’s signature properties – the Rockefeller Center – sums up our approach and track record at creating truly activated, highly-programmed destinations. In addition to a high quality, broad retail offering, a wide range of entertainment, rotating art displays, seasonal events (like the Tree Lighting and skating rinks), music performances and concerts, and cultural events ensure that ‘The Rock’ is a destination for tenants, public, and visitors to the city alike.

Placemaking at the Rockefeller Center – Holiday Tree Lighting, music, sports and cultural events, and activated retail

Tishman Speyer’s team of retail specialists would bring this track record of success to the Mercer Mega Block sites, to create an activated and engaging ground floor experience for the public and building occupiers alike. In concert with high standards of operation and maintenance, event programming, landscaping and design, and ‘destination retail’, we aim to turn a potentially mundane retail experience that principally serves the building occupiers’ needs in to a mixed, public, and diverse environment that attracts people from further afield to engage with the space. In addition to this, our development plan makes an explicit commitment to fostering small businesses and a diverse retail mix. Small businesses in Seattle are under increasing pressure – while growth in wealth and disposable income among the populace helps drive overall growth, years of rent increases, increased competition, undercutting by online competitors, and escalation in overheads is driving many small retail operators out of business or to marginal locations. The Mercer Mega Block site offers fantastic potential; however, it is one with relatively limited footfall today. In order to make a truly attractive retail location, a mix of offerings and highly-programmed design on the site will be key to creating successful and vibrant ground floor activation. That mix should also do more than serve just the population of the office and residential buildings above, but also offer something to the breadth of the community via inclusive programming and a range of offerings. As a result, we propose that 50% of the retail space in our development be set aside for lease by non-chain (defined as fewer than 10 locations) operators, and local, female and minority-owned businesses. Further, we propose to offer this space at a heavily-discounted 50% of the market rate – to incentivize and bring about a mixed retail concept that allows local and minority-owned businesses and micro-retail to flourish in a prime Seattle location that they would not otherwise be able to afford.

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We have been in discussion with The Urban League of Metropolitan Seattle, and Ventures, to form partnerships that will facilitate access for women- and minority-owned retail tenants, ensure that information on this opportunity is spread amongst the community, and that a successful diversity of businesses is welcomed in to the development. Reaction from both the Urban League of Metropolitan Seattle and Ventures has been extremely positive, and both groups have endorsed our proposal. These endorsements are included in Section 9 of this RFP response.

“we propose that 50% of the retail space will be set aside for lease by non-chain operators, and local, female and minority-owned businesses…. at a heavily-discounted 50% of the market rate to incentivize a mixed and inclusive retail concept”

We look forward to working with the City’s Office of Economic Development and WMBE women- and minority- owned business team, Urban League of Metropolitan Seattle, Ventures, and city-wide organizations in order to bring this commitment to promoting businesses from under-served groups to fruition.

Community / Non-Profit Training Center As part of our commitment to turning the retail and ground floor spaces of the development to more community- oriented and public uses, we will accommodate up to 5,000 square feet of training and/or non-profit community space, also heavily discounted at 50% of market rate – thereby allowing access to a prime location typically too expensive for this use, and encouraging a mixed community of building users and occupants.

Daycare Childcare and daycare is significantly under-supplied in Seattle, with some facilities having waitlists of up 18 months for enrollment, and at prices which force many families to make decisions between employment and staying at home to care for children (this decision is typically levied upon the woman as primary caregiver, thereby enhancing existing gender imbalances of economic opportunity). This lack of available daycare facilities is likely to get worse following years of in-migration of young professionals and ‘millennials’ who are now seeking to start families and raise children. The ability of Seattle to provide this sort of key infrastructure that services the needs of families is key to remaining competitive at retaining and attracting a talented workforce. Constraints like lack of available care or education facilities is a key driver of out-migration, either out of the region altogether or to the suburban locations / the Eastside, contributing to lost tax revenues, as well as a heavy strain on road infrastructure and increased pollution through commuters travelling in and out of the city every day. While we did not feel that the site could successfully accommodate a full-sized school (with a lack of outdoor space in the vicinity for physical education and recreational facilities), our development plan proposes inclusion of a daycare facility, working off of our existing partnerships with companies like Bright Horizons that already successfully operate high-quality facilities within the vicinity – and within Tishman Speyer’s portfolio.

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Public Art With a history steeped in high-profile art collections displayed in and around our buildings, and leadership of famous artistic institutions (Jerry Speyer, founder of the company, is Chairman Emeritus of MoMA), Tishman Speyer is renowned worldwide for its use of public art to enliven and increase the appeal of its properties and public spaces. Whether it is using a world-renowned modern artist for the mural of an affordable housing building, sculptures in public plazas or walkways, or rotating art shows that draw visitors to the vicinity, our use of eye-catching, vibrant and playful modern art by established and emerging artists helps turn our spaces into places. For the Mercer Mega Block sites, we commit to spending $2M of our development budget on public art that will help create a fun and vibrant location which stands out from its surroundings and helps create an inviting ground floor experience.

Some of the many permanent and revolving public works of art at Tishman Speyer properties, inc. Rock Center & 1400 Mission (top row), 555 Aviation and 555 Mission

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Architecture: Differentiation by Design Tishman Speyer is renowned worldwide for its commitment to contemporary, cutting-edge and high-quality architecture. We have worked with many of the world’s highest-profile and brightest new architects, bringing world- class design that taps in to local environments and aesthetics.

Some of the world class architects working on our portfolio

We believe that interesting and high-quality architecture helps set our brand apart, attracts tenants and visitors to our buildings, and contributes to the local built environment in a way that unaspiring architecture fails to do. For a high-profile and highly-visible site like the Mercer Mega Block, high-quality architecture that enhances the surroundings is a key element to our development approach. Further, we feel that the lightning pace of development in Seattle over recent years has led to a large number of developments that have not created truly interesting designs or places – particularly in South Lake Union where there was a blank canvas to make a really special destination that has often been passed over. For the initial phase of this RFP response, we have been working on a set of initial design ideas for the site with HOK, an internationally renowned architecture firm with strong credentials in sophisticated and thoughtfully designed offices, lab buildings and attractive public spaces, who shared our goals for the site of bringing something innovative and differentiated to the development, while respecting Seattle zoning and building codes. More information on our initial design proposals is contained within Section 6, below. However, we recognize that the role of design does more than create an attractive building for its owners and occupiers. Inclusionary design and programming – thoughtful and forward-thinking design and programming that encourages groups of all ages, physical abilities and backgrounds to feel welcome – is a key part of our approach to the Mercer Mega Block. Making the development approachable for all sectors to engage with the space starts not just with design, but is an ongoing process that continues through leasing and retail mix, to curated programming and public space activation that enlivens not just the development itself, but the neighborhood. Inclusionary design that goes beyond simple ADA compliance, through to attracting and welcoming a diverse group of occupiers and visitors, is a key component and goal for our development plan.

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Projects with Olson Kundig, KPF, Bjarke Ingels, and Norman Foster

Union Labor Tishman Speyer strongly supports union labor for the site and commits to using union labor on all trades for construction of the project. Tishman Speyer has a long history of all-union and union-labor led projects totaling billions of dollars in construction costs, and has had frequent and vocal public support from union labor for its projects in the past. With Mercer Block construction costs estimated to exceed $350M, this is a significant commitment to union trades and organized labor for development of the site. We have received a very positive response from the Seattle Building Trades and Construction Council for our commitments to union labor, and they have endorsed our proposal. Their endorsement is included in Section 9 of this RFP response. Further, in addition to a commitment to union labor when building the site, we commit to using union labor within the building for ongoing operations, such as janitorial and security. This commitment echoes our current commitment on our existing building in Seattle – 520 Pike St – which is run as a union building. Reaction from SEIU Local 6 – the union body representing over 7,000 janitors, security officers, airport workers and allied industries workers – has been very supportive, and they have endorsed our proposal and commitment to union labor. This endorsement is included in Section 9 of this RFP response.

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Summary of Public Benefits Included in our offer and development plan for the site, Tishman Speyer commits to a wide range of public and community benefits: - Sustainability: we commit to a minimum LEED Gold development standard, and a commitment to LEED- certified operating practices once construction completes. We also commit to Salmon Safe practices, as well as bringing our market-leading approaches and broad experience from other projects across the world to develop innovative water and energy management programs like rainwater recycling and district heating; - A planted and green roof area on the site larger than Westlake Park – for energy conservation, water runoff, and encouraging biodiversity; - Union Labor – a commitment to use union labor on all trades for construction, as well as ongoing operations; - Affordable housing – depending on the City’s preferred development plan within our proposal, we propose 175 high-quality, well-located, family-oriented units on the 615 Dexter site. Should this be the preferred route, we would commit to building the affordable housing of comparable quality to market rate projects in the vicinity; - Transit – a pro-active transit program which targets a 20% reduction in single occupancy vehicle trips to mitigate impact on Seattle’s worsening traffic, as well as a commitment to extend the Mercer Cycle Track; - A place, not space – bringing our expertise at design and programming of mixed use retail spaces like the Rockefeller Center to the property, to create a vibrant and inclusive public space that is welcoming to all; - Inclusive, discounted retail that supports minority, female-owned and local businesses – we commit to offer 50% of all retail space on the project, at 50% of the market rate, to locally-owned, minority- or female- owned, non-chain businesses, community / non-profit space, and maker space. We want to create a diverse, equitable and inclusive experience and offering at the property; - Daycare – we propose to include a daycare on the property to help alleviate the significant under-supply of care facilities that is placing such a strain on young families in Seattle today; - Public art – a commitment to spend a minimum of $2M on public art to enliven open spaces; - Differentiation by design – we will use a world-class architect for the project to ensure that the site receives a thoughtful, innovative and high-quality design that enhances the built environment.

“a once-in-a-generation opportunity to enhance the city’s built environment and to create an inclusive, sustainable, and thoughtfully-designed destination with a true sense of place, with a wide range of public and community benefits”

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6. PROJECT DESIGN

Design quality is of paramount importance of design to Tishman Speyer. As a family owned company with a strong sense of brand and reputation, this attention to detail and commitment to quality comes from the very top of the company. We are well-known for our high-quality buildings and design that enhances the urban environment through our partnerships with some of the world’s best known and emerging architects, that meld global innovation with local tastes and practices. We take immense pride in the quality of our developments and building renovations, and would bring this to the Mega Mercer Block sites. We believe the scale, visibility and location of the sites presents an opportunity to do something special and eye-catching that improves the vicinity, and is more aspirational and appealing than many other South Lake Union buildings that ostensibly placed design aesthetics and place-making as a relatively low priorities. As such, we have been working with the local team of leading global architect HOK on a number of initial design iterations that go beyond the traditional ‘wedding cake’ massing prescribed by zoning rules. While we are happy to pursue that design intent further with the City if that is the ultimate preference for the site, for the purposes of this RFP we have proposed a design that seeks to create something different for this gateway site, while meeting zoning code and minimizing the number and scale of departures and Potential ‘wedding cake’ design for the site variances. The design included herein emphasizes open and green space on enlarged contiguous terraces, with a design that separates the towers – a goal which serves the building tenants through preservation of natural light and view corridors, but also one which creates a feeling of openness and ‘porosity’ of the site for observers and passersby, by means of a less bulky structure. Given the intent of opening up 8th Avenue North and encouraging pedestrian engagement with the site, and creating engaging and inviting retail, this perception of openness while maximizing FAR for site value was a key goal of our development plan. The scheme contained herein is purely indicative of our initial thoughts for an option for the site. Regardless of eventual scheme design and layout, we commit to working with the City and its planning and design review departments to ensure a design that does something innovative and stands out, and maintains a high quality and sophisticated design for the gateway site, while conforming to City goals for site massing and design. An overview of one of our initial design concept is provided in the following pages.

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6B. PROJECT DESIGN ALTERNATE – SKYPARK CONCEPT

As an alternate to the design presented in this RFP response, we evaluated a number of design options which “pushed the envelope” in search of something inventive and special that would stand out and potentially improve the caliber of architecture and eventual building design, as well as provide scope for added public or community benefit. An alternative scheme would be the one shown below – our “megaplate” concept which bridges the two sites with supersized floorplates on the podium, offset and separated towers above. These large plate are especially attractive for technology, lab, and collaborative tenants that value improved communication and layouts that come with cohabitation all on one floor. We feel this in turn could drive a faster leasing process (and possible rent premium) for these floors, ensuring that the project is more competitive and therefore developed more promptly thanks to enhanced tenant interest. More notably, this scheme brings with it the opportunity to create a number of additional public benefits, and enhancements to the site that set it apart as a true destination. Underneath the large podium floors, the 8th Avenue North extension can be a year round, weather-protected space that is activated beyond a limited time period of a few months of the year and certain hours of the day – rather, the weather protection afforded by the office and / or lab space above could allow for the type of active outdoor retail and event space that is frequently the hallmark of vibrant and appealing outdoor spaces. Further, the larger podium floors offer the potential of a truly sizeable and contiguous open space that melds public and private uses, and creates mixed Multi-level retail & public space at Pier 17, NYC demographic cross-section of users. This rooftop could offer an elevated park with public and private spaces melding between retail, tenant outdoor space, a public park, and programed event space in a prime location by Lake Union.

Open, green, public rooftop space at Pier 17, NYC Open, green rooftop at Marui Building, Japan

While this does require significant departures and careful design of the large podium floors to reduce the perception of bulk when viewed from the street, we wanted to raise the possibility of this development plan given the potential for truly unusual public and private benefits from this approach. There is no equivalent in Seattle – while there are multiple tenant roof decks and a handful of roof top bars (which can feel exclusive, are expensive, and therefore

34 TISHMAN SPEYER | MEGA MERCER RFP RESPONSE often do not seem approachable to lower income residents or non-tenants of the building), there is nothing of this scale and potential quality in Seattle’s offering – the area of the deck shown in the image below well exceeds one acre. While we would readily pursue either the baseline scheme set out in Section 6 above (or an alternatively massed scheme), the potential merits of this design concept made us feel like it may merit further consideration and discussion with the City should we be selected as the winning bidder on the site.

Potential indicative massing for the SKYPARK scheme:

▪ substantial, weather-protected retail arcade running along the extended 8th Avenue North ▪ elevated park area exceeding one acre providing a large, public-private mixed use space with exciting opportunities for public art, event programming, cultural spaces, tenant terraces, retail and restaurants, open space and park areas

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7. FINANCIAL OFFER

Transaction structure Our RFP response and proposal includes the option for the City to pursue either a fee simple sale of the site to enhance the upfront purchase price and capital payment, or a ground lease structure. We present these two approaches for both of our development plan options (option one: all-commercial and retail; and option two: commercial + affordable housing on 615 Dexter).

Due Diligence Period & PSA Buyer will complete its due diligence within forty five (45) calendar days from being selected as the exclusive purchaser (via execution of an Exclusive Negotiating Agreement). Seller shall provide reasonable access to the site in order to allow Tishman Speyer and its advisors to complete its due diligence and inspections. Upon the City’s confirmation of Tishman Speyer as the exclusive purchaser of the Property, we will endeavor to complete a mutually acceptable Disposition and Development Agreement (DDA) with the City in good faith as quickly as possible. The DDA shall contain customary provisions addressing physical inspections, representations and warranties, environmental matters, surveys, closing documents, apportionments, risk of loss, default remedies and other related terms. Should the DDA negotiations exceed the 45 day due diligence period, buyer will provide City with an Intention to Proceed with the transaction (or notice of issues identified during due diligence) in order for DDA negotiations to continue. Upon completion of due diligence, buyer shall make its first deposit (as set out below) in to an escrow account with a title insurer acceptable to buyer and seller, which shall become non-refundable once the DDA is fully executed by both sides.

Purchase price & earnest money deposit

Option 1: Mixed Commercial Office Development Across Entire Site – Retail, Office and Lab Option 1A: Fee Simple Purchase price – total purchase price of $160.0M. Within three (3) business days of an executed Disposition and Development Agreement between buyer and seller, we will deposit $6.5M cash as earnest money. Upon the later of agreement of the PSA or completion of the due diligence period (the Non-Refundable Date), the $6.5M will go non-refundable as buyer’s initial deposit (deductible from purchase price). Upon each anniversary of the Non-Refundable Date up until the final land payment, buyer will deposit an additional $6.5M deposit (deductible from purchase price). Buyer shall make the final closing payment once entitlement (defined as receipt of Master Use Permit) is achieved. Outside Date: if entitlements have not been received within three (3) years of the Non-Refundable Date, buyer will make the final land payment on the third anniversary of going non-refundable.

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Example payment timing, assuming entitlement achieved in just over two years: Non-Refundable Date: $6,500,000 First anniversary of Non-Refundable Date: $6,500,000 Second anniversary of Non-Refundable Date: $6,500,000 Final Land Payment at Entitlement: $140,500,000 Total payments $160,000,000

Upon final land payment, fee simple interest in the land shall transfer to buyer.

Option 1B: Ground Lease Capital payments – total initial capital payments for the ground lease interest in the land of $70.0M. Buyer shall follow the same deposit structure and timing as above (Option One: Fee Simple), with deposits of $6.5M annually, and with the same outside date of three (3) years from the Non-Refundable Date. Example payment timing, assuming entitlement achieved in just over two years: Non-Refundable Date: $6,500,000 First anniversary of Non-Refundable Date: $6,500,000 Second anniversary of Non-Refundable Date: $6,500,000 Final Land Payment at Entitlement: $50,500,000 Total payments $70,000,000

Once the final land payment is made, the ground lease term will commence. Buyer shall make a $4.0M annual rent payment each year on the anniversary of the final land payment. This payment shall escalate 2.0% annually each anniversary following that, throughout the course of the term. This payment shall be made regardless of whether the development has been completed or leased. Example ground rent payment schedule, first five years: Ground Rent Year One: $4,000,000 Ground Rent Year Two: $4,080,000 Ground Rent Year Three: $4,161,600 Ground Rent Year Four: $4,244,832 Ground Rent Year Five: $4,329,729

Total ground rent payments over 100 Year Term: $1,248,929,224 (excluding initial payment) Total ground lease payments, inc. upfront payment: $1,321,429,224

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Option 2: Mixed Use Commercial Office on Mercer Blocks, and Affordable Housing on 615 Dexter Site Option 2A: Fee Simple Purchase price – total purchase price of $104.0M. Buyer shall follow the same deposit structure and timing as above (Option One: Fee Simple), with deposits of $3.5M annually, and the same outside date of three (3) years from the Non-Refundable Date. Example payment timing, assuming entitlement achieved in just over two years: Non-Refundable Date: $3,500,000 First anniversary of Non-Refundable Date: $3,500,000 Second anniversary of Non-Refundable Date: $3,500,000 Final Land Payment at Entitlement: $93,500,000 Total payments $104,000,000

While this represents a $56M reduction in purchase price vs. the all-commercial scheme pricing in Option 1, this pricing reduction represents a net cost of $320k per unit to deliver 175 units of high-quality housing in a prime location – in line with current construction pricing for a typical affordable housing project (where average unit pricing cost regularly exceeds $300-350k per unit in construction costs alone, excluding land and related costs) – let alone one of the quality we are committing to in a gateway South Lake Union location that many Seattle residents are priced out of.

Option 2B: Ground Lease Capital payments – total initial capital payments for the ground lease interest in the land of $40.0M. Buyer shall follow the same deposit structure and timing as above (Option One: Fee Simple), with deposits of $3.5M annually, and with the same outside date of three (3) years from the Non-Refundable Date. Example payment timing, assuming entitlement achieved in just over two years: Non-Refundable Date: $3,500,000 First anniversary of Non-Refundable Date: $3,500,000 Second anniversary of Non-Refundable Date: $3,500,000 Final land payment at Entitlement: $29,500,000 Total payments $40,000,000

Once the final land payment is made, the ground lease term will commence. Buyer shall make a $2.75M annual rent payment each year on the anniversary of the final land payment. This payment shall escalate 2.0% annually each anniversary following that, throughout the course of the term. This payment shall be made regardless of whether the development has been completed or leased.

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Example ground rent payment schedule, first five years: Ground Rent Year One: $2,750,000 Ground Rent Year Two: $2,805,000 Ground Rent Year Three: $2,861,100 Ground Rent Year Four: $2,918,322 Ground Rent Year Five: $2,976,688

Total ground rent payments over 100 Year Term: $858,638,841 (excluding initial payment) Total ground lease payments, inc. upfront payment: $899,638,841

No ground rent shall be paid by the affordable housing component on 615 Dexter – the two office sites on Mercer will cover the above ground rent commitments.

Ground Lease Terms Term duration – 100 years, commencing on final land payment and transfer of the ground lease interest to the buyer (as Lessor).

Right to buy – buyer requests a right to buy out the ground lease in years 15 and 25, and every 10 years thereafter, at the then Fair Market Value of the Fee Simple interest in the as-improved land.

Right to extend – buyer requests a right to extend the lease by 25 years in the final 50 years of the lease. The value of such extension payment would be determined by Fair Market Valuation of the extension term value for the as- improved land, at the point in time that the extension right is exercised by buyer.

Conditions & Contingencies Financing contingencies: this proposal does not have any financing contingencies or conditions attached to it. Podium lot coverage: following issued lot revisions, our design and massing studies assume a departure from podium lot coverage limits from 80% (increased from 75% per 23.48.240.F) to 85% total on the Mercer sites. We pursued this to reach the maximum FAR coverage allowed per zoning code (and thereby maximize value and price for the City) but also on the assumption that the 8th Avenue North extension, as envisioned as a landscaped retail thoroughfare, would count towards the project’s deemed open space, in combination with the large amounts of upper level open and green space that our proposal sets out.

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Community Benefits This RFP response includes a wide variety of intended public and community benefits that we propose as part of our offering to enhance the neighborhood, such as: - Sustainability: we commit to a minimum LEED Gold development standard, and a commitment to LEED- certified operating practices once construction completes. We also commit to Salmon Safe practices, as well as bringing our market-leading approaches and broad experience from other projects across the world to develop innovative water and energy management programs like rainwater recycling and district heating; - A planted and green roof area on the site larger than Westlake Park – for energy conservation, water runoff, and encouraging biodiversity; - Union Labor – a commitment to use union labor on all trades for construction, as well as ongoing operations; - Affordable housing – depending on the City’s preferred development plan within our proposal, we propose 175 high-quality, well-located, family-oriented units on the 615 Dexter site. Should this be the preferred route, we would commit to building the affordable housing of comparable quality to market rate projects in the vicinity; - Transit – a pro-active transit program which targets a 20% reduction in single occupancy vehicle trips to mitigate impact on Seattle’s worsening traffic, as well as a commitment to extend the Mercer Cycle Track; - A place, not space – bringing our expertise at design and programming of mixed use retail spaces like the Rockefeller Center to the property, to create a vibrant and inclusive public space that is welcoming to all; - Inclusive, discounted retail that supports minority, female-owned and local businesses – we commit to offer 50% of all retail space on the project, at 50% of the market rate, to locally-owned, minority- or female- owned, non-chain businesses, community / non-profit space, and maker space. We want to create a diverse, equitable and inclusive experience and offering at the property; - Daycare – we propose to include a daycare on the property to help alleviate the significant under-supply of care facilities that is placing such a strain on young families in Seattle today; - Public art – a commitment to spend a minimum of $2M on public art to enliven open spaces; - Differentiation by design – we will use a world-class architect for the project to ensure that the site receives a thoughtful, innovative and high-quality design that enhances the built environment.

While many of these benefits are hard to quantify monetarily in terms of economic value (such as green roofs, design, place-making, public art, etc.), the following can be ascribed tangible monetary value: - Affordable housing: with the cost to develop and build affordable housing escalating rapidly and increasingly becoming unfeasible in the urban core of Seattle, our proposal to provide 175 high-quality units in South Lake Union – subsidized by the value created from the Mercer block sites – represents a commitment to provide affordable housing in a location where it would not typically be feasible at a significantly reduced cost to the City. We estimate the true cost to develop 175 high-rise units in this location, with one level of basement, to exceed $90M – excluding the cost of land. The differential in purchase prices offered between our all-commercial scheme (Option One) and the affordable housing option (Option Two) represents a $56M delta – representing a saving and benefit to the City of over $35M (vs. the full development cost of equivalent housing), excluding the cost of any land to provide a comparable site in the area.

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- Discounted retail: our development plan prioritizes retail and ground floor activation around the perimeter of the site and the 8th Avenue North extension to create a lively and vibrant hub within the neighborhood. With almost 60,000 sf across the Mercer sites, and over 10,000 sf intended for 615 Dexter – totaling roughly 70,000 sf – our commitment to offer 50% of this space at 50% of the market rate is a significant offering aimed at fostering a diverse retailing profile of local, minority- and female-owned businesses, enabling such retailers to locate in a place where pricing and competition is too typically prohibitive. Assuming average net rents in the area today are $45 psf (and growing rapidly), 35,000 sf at an average $22.5 psf discount is a truly meaningful annual commitment of over $785,000 in discounted rent (in today’s rents, with this benefit repeating annually going forward and likely to increase as rents increase in the vicinity); - Union labor for construction and operations: our commitment to use all union labor ensures that represented and organized labor receives the benefit of every dollar of our construction budget, which exceeds $350M. Further, operations and maintenance of Class A office buildings requires a large number of janitorial, security, and maintenance personnel. Our commitment to operate the buildings with all-union labor represents an estimated almost $1M commitment at the outset, rising over time with escalation and wage increases. Given the make-up of the janitorial and maintenance service industries is predominantly minority or immigrant communities, this is a direct benefit to lower income and often marginalized groups within Seattle; - Sustainability: while many of our sustainability initiatives relating to environmental protection or biodiversity, broader impact on the environment, Salmon Safe operations, and so on are hard to quantify, several have tangible economic benefits in terms of reduced operating costs for our tenants in terms of water, electricity and heating costs. Based on our detailed estimated operating budget for the project once complete, and operational experience across our portfolio and at our Seattle property, we would expect utility costs for the completed properties to exceed $1M annually (today). A sustainable development as set out in this proposal can reduce energy bills significantly – even a 20% reduction in utility costs would result in a $200k annual saving for the building occupiers (rising over time), beneficiaries of which would include minority-owned businesses, and potentially affordable housing residents in the development; - Mercer cycle track: our commitment to extending the Mercer Cycle Track lanes, along with associated hardscaping and landscaping, represents a benefit of several hundreds of thousands of dollars.

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8. PROJECT FINANCING PLAN

Tishman Speyer has a long and successful track record of funding, capitalizing and developing highly complex, large scale sites like the Mercer Mega Blocks, and has a large and seasoned team of professionals dedicated to raising debt funding and loans, creating joint venture partnerships with some of the world’s leading equity partners, and meeting our commitments to project financing requirements. Approach to financing the transaction: Under our proposed offer to the City, Tishman Speyer, through Tishman Speyer 2007 Holdings (financial overview provided along with this RFP), would be responsible for funding the commitment to purchase the land or make the lump sum ground lease payment at entitlement. Given the strength of Tishman Speyer’s balance sheet, we have the financial capacity to make the upfront payments on the land and commit the capital for ‘soft costs’ and fees to take the project through entitlement without either an equity partner or third party lender.

Our typical approach to acquiring and capitalizing large sites like the Mercer Mega Blocks would be to bring in an equity partner either prior to construction of the project. For the Mercer Mega Blocks, we would propose this approach of Tishman Speyer being responsible for the land payment commitments with the possibility of bringing in an equity partner prior to construction or following entitlement when the bulk of the financial commitments commence relating to construction costs, permits and fees required to develop the site are known and project risk is lowered. Tishman Speyer has partnered with an extensive list of world class partners around the globe.

We would not propose – and do not assume as part of our analysis – that we raise third party debt funding in order to fund land payments or close on the land. Besides being an added layer and complication for a smooth and timely closing of a transaction, placing a loan on the land itself prior to construction restricts flexibility to respond to the market and can be punitive on land holdings if there is a temporary correction in market economics while the site is waiting to be developed. As we approach commencement of construction on the site, our Debt Capital Markets team will engage with a broad range of lenders to arrange construction loan funding for the development. As is set out in Appendix C.7, we have taken a conservative approach to third party loan funding, assuming a relatively low Loan-to-Cost (LTC) ratio of 50%, with equity funding the first 50% of costs before debt begins to fund (this reduces risk for lenders and makes the loan more appealing to them). Given the size of the project, we would almost certainly raise a third party loan for construction of the project; however, in some instances we have proceeded with large developments on an all-equity basis in the past.

A development of this size – estimated $625-770M total project cost, depending upon which development plan is pursued – and consequent debt fundraising of $312.5-385M, is not without its challenges; however, this is a relatively typical development size for us and fully within Tishman Speyer’s capacity to capitalize and execute upon. This is evidenced by a large number of examples from our track record, including one of our most recent development starts, the 2 million square foot “Spiral” development in New York, which has a significantly higher total cost than the Mercer Mega Blocks’ projected cost (at approx. $3.7 billion) and was recently successfully leased and fully capitalized allowing for construction commencement.

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Debt Financing: for the Mercer Mega Blocks, we have assumed debt financing that is in line with recent development funding we have seen on our other projects, and based upon input from the debt brokerage community. For the purposes of our proforma, we have assumed debt at 50% LTC, equity first, at forward L+375 bps (L+280, plus LIHTC for the affordable execution at 615 Dexter), with market fees and upfront costs. More detail on our debt financing assumptions is provided under Appendix C.7.

Expected equity return parameters:

Our proforma analyses for the two options (mixed use commercial, and commercial / affordable mix) are provided under Appendix C.7. By way of summary: - Expected Internal Rates of Returns (IRRs) for a fee simple transaction, based on development and subsequent 10 year ownership of the property are in the low teens percentage range, depending upon which development plan option is pursued. Equity Multiple (net proceeds vs. equity invested) for the two options are in the 2-2.5x range (including free cash flow and debt refinancing proceeds), with Return on Cost (projected income vs. total cost) at project stabilization in the mid- to high-6% range; - Expected cap rates for a potential sale of the project once complete are estimated at 4.5%-5% depending on timing, parcel and development plan. This is reflective of our long term confidence in the location (and Seattle more broadly) as a prime investment target for global capital, with an allowance for some outward movement in today’s prime cap rates based on future risk free rate and interest rate movement projections over the duration of the proforma.

Further detail regarding our projected development proforma, cost and income assumptions, cost assumptions, sources and uses of funds, income statements and profit analyses are provided under Appendix C.7.

Perceived Challenges to Funding and Mitigants The Mercer Mega Blocks represent a very high-quality site in one of the nation’s most sought after submarkets. Market economics are very appealing today and we believe that Seattle’s ongoing consolidation as a varied, talented and attractive location for business to grow and locate will ensure its ongoing position as a gateway market over the medium- to longer-term. As such, we do not perceive significant issues in raising the debt funding for the site, and any necessary outside equity in the future as the project matures towards entitlement and commencement. In addition, our proposed structure of underwriting the commitment for the land payments through Tishman Speyer’s own funding sources significantly de-risks the transaction from the City’s perspective of selling the land.

However, as with any site of this size and relative complexity, alongside a few location-specific factors, there are several components which could make debt and / or equity partner funding more difficult: - Ground lease structure – should the City opt for a ground lease structure, this is typically seen by lenders and financial institutions as equivalent to a loan on the land, whereby the ground rent is capitalized and that lump sum is treated as an existing loan on the land.

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As a result, loan funding can either be restricted to lower LTC levels (or Loan-to-Value levels upon refinancing) or certain lenders can have reduced appetite to provide funding and capitalize the development. We have experienced a number of instances where a relatively large pool of lenders simply do not wish to loan on ground lease structures, particularly if aggressively structured in favor of the ground lessor. Further, ground leases with large shares on NOI, heavy escalations or market resets can be problematic for both lender and developers (an example being where a ground lease payment schedule resets at a time a tenant vacates the property, leaving a large income deficit that causes financial trouble at owner and lender levels). Mitigant: for this reason, while we prefer a fee simple transaction on the sites, we recognize the City’s desire for a potential ground lease and have structured our proposal in a way that makes the development the most fundable and attractive to third party capital – and therefore the most feasible to develop out in the shortest possible timeline. - Size – raising a loan and committing capital for a project in excess of $700M could require a group or ‘club’ of lenders to participate, depending upon market appetite and the financing path that is most feasible at the point of fundraising. With additional participants, comes additional layers of approvals and execution risk, as well as a smaller pool of potential lenders who have the capacity for that size of loan. Mitigant: Tishman Speyer has a dedicated Debt Capital Markets team with broad connections across the debt markets and debt brokerage community. We have successfully raised similar – or in fact larger – debt commitments on numerous occasions and are confident in our ability to replicate this success on this development. - Environmental conditions – the site has a large number of environmental issues relating to contamination from previous uses and contamination plumes from adjacent sites. Further, given its proximity to Lake Union, the water table for the sites is typically pretty close to grade (albeit currently lower given the large amount of development and dewatering in the area). While these are by no means unique to South Lake Union and can be appropriately budgeted, managed and remediated, appropriate guarantees and covenants to resolve may be required from lenders, and it is possible that it marginally reduces lender and partner appetite to invest in the scheme. Mitigant: Tishman Speyer has a long and successful track record of dealing with highly complicated, contaminated, brownfield, sites that have comparable or more demanding requirements, and as such we see this as a relatively limited risk to the site. - Presence of King County sewer – the presence of the sewer poses a number of considerations, including a reduced parking count, which while consistent with our commitment to a more sustainable building with fewer vehicular trips, may lead some lenders to query in terms of leasability of the space (we do not feel that is the case but may need to get outside capital comfortable with this). It also creates a layer of additional risk, cost and time associated with ‘bridging’ over the sewer line and creating foundation piles around it, ensuring no ‘ground heave’ as ground load above is lifted off, or placed back above the sewer line from the new building, as well as dealing with appropriate utility / King County approvals which may add time, logistical constraints, or cost to the project. While we feel we have done an appropriate amount of due diligence and cost / feasibility analysis around this issue from our studies to date, this is something that will

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need to be addressed as a site constraint with lenders, partners and potential pre-lease tenants in terms of ensuring delivery on time and budget. Mitigant: Tishman Speyer has extensive experience of similar or more challenging conditions across a spectrum of sites across the globe, and can bring this track record and experience to developing the site and mitigating third party concerns. - Path to entitlement and construction commencement – given the high profile nature of the site (being sold by the City), agreement and approval on the appropriate design, public benefits and transaction structure could be more prolonged than through a lower profile sale and entitlement of a less visible piece of land between two private entities. As such, there may be some question over the timeline and risks around this factor from lenders or third party capital. Mitigant: we have a conservative 30 month design and entitlement period (following close of the transaction) in our underwriting of the site which should help mitigate concerns over timing and allow ability to incorporate stakeholders’ feedback and agree on a path forward to construct the site. - Market economics – the Seattle market is, in our and many others’ opinions, one of the strongest in the nation with a compelling set of economic fundamentals around in-migration, job growth, company expansion, supply/demand, and desirability of lifestyle that has underpinned a phenomenal growth path. However, we are arguably 7-8 years in to this economic expansion, and while there are no immediate signs of concern, acquiring a large development site at this stage of the economic cycle is arguably not optimal timing – should there be a local, technology sector or broader economic correction, commencement of construction may need to be put on hold until the economy recovers sufficiently. Further, a large portion of the localized growth cycle has been driven by Amazon’s growth, who are widely publicized to be focusing their expansion efforts elsewhere. Some lenders or capital partners may be concerned about this. Mitigant: in relation to timing of the development, Tishman Speyer can accommodate the interim and full land commitment through internal capital sources, meaning that no third party financing or outside investor participation is required in order for us to close on the land. While we may opt to bring in an outside equity partner, we do not intend to place a land loan or lender financing on the development until we are close to commencing on the development of the site – affording us a patient approach that can weather economic cycles if necessary. Beyond that, we are highly confident in the medium and longer term growth path for Seattle and think that a broad range of data and fundamental economic conditions are present that are conducive to broader and sustained growth. We believe that a site of this quality, with the solid economic foundations that Seattle offers, will remain an attractive asset and one which will appeal to lenders and third party capital in a way that allows the site to be capitalized and completed across a range of economic conditions.

As such, while there are a number of inherent risk factors and complications with the site, we remain confident that a company with Tishman Speyer’s caliber of track record and experience will be able to overcome any concerns and fully capitalize the project to execute on the development plan.

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Market Outlook and Competitive Landscape Demand generators for South Lake Union office and lab space, and the Mercer Mega Blocks as part of that, are driven by the ongoing growth of locally-based technology, life science, and professional services companies, as well as rapid inbound migration by technology and innovation companies (in particular from the Bay Area due to the comparative affordability and availability of Seattle’s real estate, in combination with the broad and highly-skilled talent pool). Seattle’s broad-based economic growth, ongoing emergence as one of the world’s leading tech and innovation centers, relative discount to other innovation and talent hubs like SF, LA, and NY, and the potential for expansion through the future development pipeline in the city (vs. more constrained locations like the Bay Area) will continue to drive demand and provide room for growth. Expansion of companies in and into the area is further facilitated by a relatively favorable overall recruitment and environment, in which a combination of good quality of life, plentiful opportunities and relative affordability for skilled employees has helped cement Seattle’s place as one of the premier employment hubs in the nation, further incentivizing company expansion in the region. Much of this growth and consequent demand for space has been centered on South Lake Union, where technology, life sciences, innovation, design and professional services companies have absorbed record-setting amounts of space at ever- increasing rental rates.

Seattle has seen significant development pipelines across a wide variety of sectors over recent years, with office space readily absorbed by tenants, often via pre-leasing prior to project completion or to commence new development starts. Despite a boom in office development volumes, demand has continued unabated while the office supply pipeline has been largely absorbed. As such, there is a current reported demand requirement for over 4 million square feet of space requirements, set against a relatively limited remaining supply of under 2 million square feet of new construction in Seattle. While not all of this demand is centered around new growth or expansion that will drive ‘net absorption’ of space, this supply-demand picture as a whole implies a continuation of development-favorable conditions that bodes well for demand drivers and economic outlook of the Mercer Mega Blocks and its competitive set – particularly in new construction buildings, in large blocks of contiguous space where options are scarce, and for technology, lab and innovation tenants – all of which our development plan for the Mercer Mega Blocks aims to serve in terms of market demand.

While future projects and land sites in South Lake Union and Seattle more broadly will provide alternative supply and therefore competing options for tenants evaluating the Mercer Mega Block sites, long term commitments being made today by growing tenants are increasingly reducing this future pipeline and look set to keep the supply- demand dynamic relatively favorable for development of the Mercer Mega Blocks going forward. Supply of available land in high-quality locations such as the Mercer Mega Blocks is continuing to diminish, consolidating the site’s appeal and reducing the volume and quality of competitive set against which we would expect to compete.

Some of this future development pipeline is in locations which are more centrally-located within South Lake Union or downtown Seattle (with greater transit or amenity options in the vicinity), improvements to the area around the Mercer Blocks today – and going forward as new developments become occupied – are increasingly supportive of the Mercer Mega Blocks as a prime location. While a short while ago the site was arguably on the edge of South Lake Union, developments in the immediate vicinity up and along the Dexter Avenue and Mercer Street corridors – along with significant leasing activity by household name tech and life science users – will continue to establish the

46 TISHMAN SPEYER | MEGA MERCER RFP RESPONSE desirability of the location for future leasing demand. Further, these new developments look set to further amenitize the area (thereby improving appeal) as well as a providing a larger local population to support a more vibrant and broader retail offering – including our own larger, ambitious plans for the retail mix at the Mercer Mega Blocks site. In order to reflect the improving nature of the site going forward and its relative position compared to current competition, we have estimated projected rents for the site today at a slight discount to the peak of the market and most centrally-located options currently being built, but have increased our rental rate projections over the coming years to reflect this projected improvement in the location’s appeal and ongoing demand from tenants for the sort of development we propose.

In summary, we see ongoing demand for the location, and improving or stable market conditions over the medium to longer term.

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9. ENDORSEMENTS FOR TISHMAN SPEYER’S BID

The following groups have provided endorsements for Tishman Speyer’s bid, as enclosed herein:

Bellwether Housing

Urban League of Metropolitan Seattle

Ventures

Cascade Bike Club

Seattle Building Trades Council

SEIU 6

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APPENDICES

Appendix C.1 - Transmittal Letter

Appendix C.2 - Respondent Major Team Members Financially Responsible Parties and Certifications

Appendix C.3 - Firm Qualifications & Project Information

Appendix C.4-C.6 - Lists of Projects

Appendix C.7 – Proforma (Proprietary, Confidential and Not for Disclosure)

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